AveXis (AVXS) Takeover Validates the Paradigm-Shifting Nature of AVXS-101, Says William Blair


It’s a big day for AveXis (NASDAQ:AVXS). The drug maker has reached an agreement to be acquired by Novartis (NASDAQ:NVS) for $8.7 billion, or $218/share. Fortunately for shareholders, the deal represents an approximately 88% premium to Friday’s closing price.

William Blair analyst Raju Prasad points out that the deal price is on the higher end of recent deals for pre-commercial-stage companies and validates the paradigm-shifting nature of AVXS-101.

“We note that this acquisition is the first multibillion transaction for an AAV company and comes on the heels of recent safety concerns raised by Dr. Jim Wilson. The deal also highlights Novartis’s interest in the cell and gene therapy space with Kymriah and the ex-U.S. Luxturna deal. We believe that other companies may begin to follow suit and see this as a positive for other AAV companies, most notably in our coverage, Spark (NASDAQ:ONCE) and Audentes (NASDAQ:BOLD),” Prasad wrote.

The analyst believes that Biogen (NASDAQ:BIIB) and Roche (OTC:RHHBY) could consider competitive bids given their exposure to the space; however, Prasad acknowledges that the healthy acquisition premium may have already been the result of a competitive process.

The next anticipated event for the company is a STR1VE update at AAN, which the analyst believes may show impressive results given the timing of the acquisition.

AVXS is currently trading at $211.06, up 95.15 or 82%, and many investors are now wondering if the stock has reached its peak. If we turn to the Street in general, we can see that the stock has a Buy analyst consensus rating. In the last three months, AveXis received 7 buy and 6 hold ratings. However, these analysts have an average price target on the stock of $155.80, which suggests a 26% downside from current levels. So the answer is clearly – yes.